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Long-Term Cryptocurrency Analysis: Break-Down or Reversal Ahead?

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From a long-term technical perspective, not much has changed in the cryptocurrency segment in the past few weeks, with only Bitcoin’s rally providing bulls something to cheer about. The bearish trend that has been dominant for months is still intact in most cases, and despite the several rally attempts, sellers always returned strong, pushing the major coins back towards the key support levels that have been tested in recent months.

The total value of the market has been stuck below $300 billion, with the exception of a few brief spikes, while capital flows were negative almost all year. In spite of the clear segment-wide selling pressure, the most important coins are still holding up above key support, and BTC’s current relative strength is a possible game-changer for the coming weeks. Should the top coins follow the relatively weaker ones, such as LTC and XMR below long-term support, a longer structural bear market could commence.

BTC/USD, Daily Chart Analysis

For now, BTC is safely above the structurally important $5850 level, and the coin broke out of the declining trend during the recent surge. That said, given the widespread selling pressure in the market, a trend change is not yet confirmed and traders shouldn’t enter full positions here, while investors should still hold on to their coins.

In the case of a breakdown below $5850, the next major support is found at $5000, while a recovery above $8400 would confirm a new uptrend. In the current broad trading range, the $7650-$7800 zone is the most important with other levels of interest at $7350, $7000, $6750, and $6250.

ETH/USD, Daily Chart Analysis

Ethereum has been showing short-term weakness compared to Bitcoin despite the fact that that the April lows are still well below the current price level. The downtrend in the coin is clearly intact, and a test of the 4360 level is now very likely, even if a bullish reversal is ahead. The long-term trend signal is neutral for ETH, while short-term the coin is on a clear sell signal. Support above the April low is found at $400 and $380, while strong resistance is ahead at $450, $500 and between $555 and $575.

Litecoin

LTC/USD, 4-Hour Chart Analysis

Litecoin continues to lead the way lower, being stuck in a long-term downtrend after failing to rally durably above the $90 support/resistance level. The $75 support is currently in focus again, and a move below that is likely, given the strong downtrend. Traders and investors shouldn’t enter new positions, with further strong resistance ahead at $100 and support found near $64-$65.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash is also weak on all time-frames, trading on a new cycle low already, below the $215 support. The coin bounced back as far as $300 during the consolidation phase, but as the break-out above resistance failed, the strong downtrend remains intact. Primary support is now found at $200, while resistance is ahead at $265, near $300, and at $360.

Ripple

XRP/USD, 4-Hour Chart Analysis

Ripple experienced a hectic consolidation period, but as selling pressure remained apparent, all rally attempts failed. The coin is barely holding up above the structurally important support level near $0.42, while trading has been centered around the $0.45 level for weeks Above that, strong resistance is ahead at $0.51, $0.54, and $0.64, while the next major support zone is found between $0.30 and $0.32.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic continues to be very volatile and range-bound, and the coin is in a relatively stronger position compared to the other majors, trading well above the key $13-$13.50 zone. That said, the short-term setup is still bearish, and traders shouldn’t enter new positions here. Further support is found near $16, $14.50, and $11, while resistance is ahead at $18.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero experienced wild counter-trend rallies after its structural break-down, similarly to Dash, but as the coin failed to recapture key resistance zones, the downtrend remains intact. Now, XMR is back near the June low, and a test of the lows, and even new lows are likely in the coming weeks, so traders and investors should stay away from the coin. Support is still found near $110 and $80, while resistance is ahead at $125, $150, and $175.

NEO

NEO/USDT, 4-Hour Chart Analysis

The strong bounce in NEO also fizzled out, and the coin drifted back towards the June lows, together with the other relatively weak coins, confirming the segment-wide downtrend. Now, a move to $25 is likely even if a reversal is close, and traders and investors should stay away from entering new positions here. Primary support is found near $2650, while resistance is ahead at $30 and $34.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA is stuck in a strong downtrend, and the coin is trading right at the June low, risking a structural break-down and a long-term sell signal. Barring a quick reversal, a move to $0.75 is likely, with further levels at $0.64, and $0.48, and resistance ahead at $1, $1.1, and $1.2.

EOS

EOS/USD, 4-Hour Chart Analysis

EOS is hovering above the key $6.50-$7 zone, still showing long-term technical strength, but a move below that zone would be a bearish sing, and the recent short-term relative weakness is suspicious. Traders should still not enter new positions here, while investors should hold on to their coins, with further support found at $4.50, and resistance being ahead near $9, $10, and $12.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 378 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Hawkish Fed Lifts Yields, Dollar as Stock-Correction Continues

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US stock markets had a choppy and mixed session, and the major indices closed the day virtually unchanged, despite the early losses and the negative news flow. The US housing market disappointed again, the EU-Italy debate over the country’s budget continued, the US-Chinese relations further deteriorated, and the Fed also provided a negative catalyst towards the end of the day.

Dow 30 Index Futures, 4-Hour Chart Analysis

Investors were eagerly waiting for the meeting minute form the Fed’s latest meeting, but those expecting a dovish surprise were let down. The transcript contained more hints to tighter-than-expected monetary policies in the coming months and years, but still after an initial dip stocks rebounded to pre-announcement levels.

US 2-Year Treasury Yield, 4-Hour Chart Analysis

While especially shorter-dated yields rallied after the release, we would add that although there were voices that the Fed should exceed the “neutral” interest rate to cool the economy in the future, those voices will likely be muted by any major correction in financial markets or even a moderate slowdown in the economy.

Russell 2000, 4-Hour Chart Analysis

Stocks weathered the rise in yields so far, but after-hours, futures markets are drifting lower, and should yields resume their recent swift advance, another wave of selling could hit risk assets. With a lot of stocks and benchmarks still clearly in oversold territory concerning the short-term momentum indicators, the choppy correction could also continue, but we remain defensive towards global stocks, and we expect the risk-off period to continue in the coming weeks.

Dollar Extends Early Gains as WTI Crude Dips Below $70

Dollar Index (DXY), 4-Hour Chart Analysis

While the Dollar was already up in early trading against most of its major peers, it got a strong boost from the meeting minutes, with the Dollar Index climbing above the key support/resistance level near 95.50, establishing a swing low.

Barring a quick reversal, the Greenback headed for another important leg higher, and all eyes will be on the 1.15 level in the EUR/USD pair, as an extended move below that could open up the way for a strong momentum move in the USD. On a positive note, the most vulnerable emerging market currencies continue to perform well, in contrast with equities in the segment, and that could give some stability to risk-on currencies in the face of the broadly negative technicals

WTI Crude Oil, 4-Hour Chart Analysis

Commodities mostly finished the day with losses amid the rally in the Dollar, but while gold still only gave back a small part of its recent gains, oil plunged to a new almost one-month low, at least as measured by the WTI contract.

The Brent contract continues to outperform despite the easing of the US-Saudi tensions, but overall the risk-off shift in global markets is clearly hurting oil.  Copper is still stuck in a volatility compression pattern, but given the lengthy consolidation, a significant move is expected in the coming days by the industrial metal.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 378 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Altcoins

Why Would Anyone Have Faith In Tether?

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I don’t want to get sued for slander so let me explain the reasoning beyond today’s title. After all of the turmoil surrounding Tether on Monday, how can the price be anywhere near the $1 parity level with the US dollar?  After more than a year, how can anyone have confidence in Tether and their common law partners Bitfinex when, for example, Circle, backed be the highly respected Wall Street giant Goldman Sachs offers an alternative?  We should also mention that Circle is just one of many so called stable coins.

It isn’t hard to find a list. Exchanges are feverishly adding stable coins. Singapore based Houbi is adding Paxos Standard Token (PAX), True USD (TUSD), Circle (USDC) and Gemini (GUSD).  

When Stable Coins Cause Instability

Well, the evidence is mounting as the months move along that so called stable coins can have the power of creating anything but stability.  This week’s experience with Tether, Bitfinex and the price explosion of Bitcoin demonstrates that there are still dangers lurking. This is why trust is important.

Monday’s gyrations were not the first questionable moment for Tether.  The coin, which gains its intended stability by being tied on a one for one basis with the US dollar, has been the subject of questionable behavior all year.  

As far back as January trade sources were expressing concern the Tether was responsible for last December’s major price bubble in Bitcoin.  The frenzy over Bitcoin set off speculation across the entire crypto spectrum. But that was just the beginning.

In June Bloomberg reported on a paper by John Griffin, a finance professor at the University of Texas, that among other things claimed 60% of last year’s price move in Bitcoin was the result of manipulation surrounding Bitfinex. That directly implicates Tether.

Using algorithms to analyze the blockchain data, Griffin’s team found that purchases with Tether were timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies.

These findings prompted the US Commodity Futures Trading Commission to step in with a series of subpoenas.

Tether’s coins had become a popular substitute for dollars on cryptocurrency exchanges worldwide, and for good reason. They are anonymous, closely tied to the value of the US dollar and can be used in exchange for Bitcoin, Ether or about 10 other cryptocurrencies.  Tether is closely associated with Bitfinex, with whom they share common shareholders and management.

Bitfinex has offices in Hong Kong but it is legally headquartered in the British Virgin Islands. In May they announced plans to move to Zug, Switzerland. Bitfinex has a sorted history of poor security, having lost nearly $100 million worth of Bitcoin from customer accounts. Moreover, while claiming to have total one for one US dollar backing for each Tether, real proof is absent.  

Further Evidence of Manipulation

Over the course of this year, as we have gathered digitally to witness the loss of nearly $600 billion in crypto value, everyone has been looking for the culprit. When I first read of some of the academic studies that blamed the advent of futures trading on the CBOE, I laughed. Honestly, I believed the real cause of the rise and fall of crypto were a well connected group of billionaires that together had the power to move markets.  

Well the folks at Chainalysis have just produced some surprising research results. Their Blockchain Intelligence Platform powers investigation software for some of  the world’s top institutions. These guys don’t do surveys, the have their hands on big data that is able to detect some interesting stuff.

Chainalysis released a new report last week showing that the so called Bitcoin whales are not responsible for price volatility. The study examined the 32 largest BTC wallets, which reportedly represent 1 million BTC, or around $6.3 billion. That is a pretty solid sample size.

The data revealed that the BTC whales are do not act in concert with one another. In fact not only are they a diverse group but about two thirds behave like longer term investors. Instead of being FOMO (Fear Of Missing Out) types, on net they have traded against the heard buying on price weakness.

Putting The Pieces Together

The crypto world is bombarded with globally generated news on an hourly basis. But what does all of it mean anyway? Hopefully this article adds some perspective on what and who has been responsible for the direction of crypto prices over the past year.  As more of these weak players are identified and depleted of their business, real investors will have the confidence to return to the market.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 113 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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EOS Price Forecast: EOS/USD Heading for Another 300% Move?

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  • EOS/USD price action via the 4-hour chart view has formed a bullish flag pattern.
  • The price is moving around levels seen back end of March to early April, before a bull run of over 300%.

The past six sessions for EOS/USD have been erratic to say the least. It has been subject to a high amount of volatility, swinging aggressively in both directions. There has been a lack of commitment from either the bear or bull camps of late. As the market continues to trade with such behavior, it appears to be trying to find its feet, ahead of a potential chunky firm trend.

EOS DApp Hacked Again

An EOS based gambling DApp, EOSBet has been hacked, with $338,000 being reported as stolen. This isn’t the first time; just back in September, hackers managed to get away with a reported 40,000 worth of EOS, which at the time had a value of $200,000. It has been said that they were able to exploit their smart contracts, having found security vulnerabilities.

Technical Review – 4-hour Chart View

EOS/USD 4-hour chart

EOS/USD price action has formed a bullish flag pattern, which began taking shape on 15th October, after the aggressive price behavior stabilized. The bulls at the time ran the price well up into $6 territory. Consequently, it then met the breached ascending trend line, failing to move back above this area. This followed the sharp breakthrough to the downside, which occurred on 11th October. As a result, a drop of over 15% was seen, forcing EOS/USD to retreat in a demand area, within the $5.0000 level proximity.

Looking to the upside, small near-term resistance is seen at around $5.6100, which is the upper trend line of the mentioned bull flag pattern. A breakout will likely open the doors to a retest of the broken ascending trend line, tracking around $6.1100. Support can be eyed at $5.4600, which marks the lower trend line of the flag. Furthermore, should this fail to hold, EOS/USD could likely fall back down to the serving demand area, within the lower $5.0000 territory.

April 2018 Bull Run

EOS/USD April bull run

In April of this year EOS/USD entered a chunky bull run, gaining over 300%. From the back end of March until 11th April, the price had been stuck within consolidation mode. Resulting in the price trading within a tight range, at levels of where the price is currently seen today.

Something quite astonishing started to unfold. Between the period of 11th April to the 29th April, a bull run of around 290% was seen. Over this time frame EOS/USD went from $5.9500 up to a high of around $23.0811. The price is currently demonstrating a similar behavior to that of what was seen during the mentioned period. It is interesting to note that the price did have historical levels to break through, as it had already run higher during the period of December 2017 and came back down. Finally, this is not to say EOS/USD will observe the same bull run. However, it is an interesting observation to be aware of.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 31 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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